U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _______
Commission file number 0-27845
VEGA-ATLANTIC CORPORATION
(Exact name of small business issuer as specified in its charter)
COLORADO 84-1304106
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
4600 South Ulster Street, Suite 240
Denver, Colorado 80237
(Address of Principal Executive Offices)
(800) 721-0016
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No ___
Check here if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this Form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. X
State the issuer's revenues for its more recent fiscal year (ending March
31, 2000): $ -0-.
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked prices of such common equity, as
of March 31, 2000: $8,073,555.
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the most practicable date:
Class Outstanding as of June 21, 2000
Common Stock, $.00001 par value 21,446,000
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Business Development
Vega-Atlantic Corporation, which currently trades on the OTC Bulletin Board
under the symbol "VGAA" (referred to in this Form 10-KSB as "VGAA"), is
primarily engaged in the business of exploration of gold and precious metals
within the United States and worldwide. VGAA entered into a joint venture
agreement with Geneva Resources, Inc., a Nevada corporation ("Geneva")
pertaining to the joint exploration of gold and silver on 213 unpatented lode
mining claims located in Camus County, in south-central Idaho (the "Vega
Property"). VGAA also recently entered into an agreement with Golden Thunder
Resources Ltd. for acquisition of an eighty percent (80%) interest in Tun
Resources, Inc., a corporation organized under the laws of British Columbia
("Tun Resources"), pertaining to gold exploration and development projects. Tun
Resources is the major stakeholder in two gold exploration and development joint
ventures in the Yunnan Province of the Peoples Republic of China.
Business Operations of VGAA
Vega Property
VGAA owns a fifty-one percent (51%) interest in profits to be realized from
the development of the 213 unpatented lode mining claims on the Vega Property.
The Vega Property is comprised of 213 contiguous unpatented lode mining claims
in Camus County, Idaho, comprising approximately 7 square miles.
On March 28, 1998, VGAA entered into a joint venture agreement with Geneva
pertaining to the joint exploration of gold and silver on the Vega Property (the
"Joint Venture Agreement"). Under the terms of the Joint Venture Agreement, VGAA
issued 500,000 shares of its restricted Common Stock to Geneva in exchange for
the purchase of a future profit sharing interest in profits. Subsequent to the
Joint Venture Agreement, Geneva transferred title to the mining claims located
on the Vega Property via quitclaim deed to VGAA.
Pursuant to the Joint Venture Agreement, VGAA is to conduct any work
programs involving exploration of the mining claims on the Vega Property in
amounts commensurate with the adopted minimum annual budget totals mutually
agreed upon between VGAA and Geneva. Management of VGAA is solely responsible
for compilation of the annual budget. Furthermore, in accordance with the terms
of the Joint Venture Agreement, VGAA is to receive eighty percent (80%) of all
net profits realized from the joint venture until its invested capital is
repaid, and Geneva will receive twenty percent (20%) of all net profits. After
the invested capital of VGAA has been repatriated, VGAA will then receive
fifty-one percent (51%) of the net profits realized from the joint venture and
Geneva will retain forty-nine percent (49%) of the net profits realized from the
joint venture. Under the terms of the Joint Venture Agreement, Geneva is not
responsible for payment of any costs of obligations associated with the Vega
Property.
On March 18, 1999, VGAA entered into a technology sub-license agreement
with Geneva (the "Sub-License Agreement"). Pursuant to the Sub-License
Agreement, VGAA acquired from Geneva a sub-license to utilize proprietary fire
and chemical assay technology and related precious metals recovery processes,
developed by AuRIC Metallurgical Laboratories LLC, of Salt Lake City, Utah
("AuRIC"), to carry out assay testing and chemical leach analysis of core
samples to be derived from any drilling on the Vega Property.
On September 27, 1999, however, International Gold Corporation, a Nevada
corporation ("INGC"), on behalf of Intergold Corporation ("IGCO"), and Geneva
initiated legal proceedings against AuRIC by filing a complaint in the District
Court of the Third Judicial District for Salt Lake City, State of Utah. The
complaint alleges various breaches of contract including, but not limited to, a
technology license agreement dated March 17, 1999 between Geneva and AuRIC
whereby AuRIC agreed to supply such proprietary technology to Geneva and grant
to Geneva the right to sub-license the proprietary technology. The damages
sought are alleged to exceed $10,000,000 and stem from reliance on assays and
representations made by AuRIC.
<PAGE>
On October 8, 1999, INGC and Geneva filed an amended complaint in the
District Court of the Third Judicial District for Salt Lake City, State of Utah.
The amended complaint increased detail regarding the alleged breaches of
contract and increased causes of action against AuRIC, and extended the scope of
the proceedings to include Dames and Moore, an internationally recognized
engineering and consulting firm, and certain individuals involved.
On June 21, 2000, INGC and Geneva filed a second amended complaint in the
District Court of the Third Judicial District for Salt Lake City, State of Utah.
The second amended complaint increased detail regarding the alleged breaches of
contract and increased causes of action against other parties involved.
Pursuant to the Sub-License Agreement, VGAA acquired from Geneva the right
to utilize AuRIC's proprietary fire and chemical assay technology and related
precious metals recovery processes to carry out assay testing and chemical leach
analysis of core samples to be derived from any subsequent drilling on the Vega
Property. Management deems such proprietary technology crucial with respect to
successful exploration of the Vega Property. The legal proceedings between
INGC/Geneva and AuRIC/Dames & Moore stem primarily from the inability of AuRIC
and Dames & Moore to transfer the proprietary technology to an independent
source. As of the date of this Annual Report, the transfer of the proprietary
technology is in question, and may never be transferred depending on the outcome
of the legal proceedings.
Management has suspended exploration of the Vega Property indefinitely
until resolution of the legal proceedings. If, during the legal proceedings, the
proprietary technology is proven to be valid and transferable, VGAA will
ultimately receive from Geneva its contractual benefits under the Sub-License
Agreement, and management intends to proceed at a future date with exploration
of the Vega Property. If the proprietary technology is not transferable, and
Geneva is unsuccessful in the outcome of the litigation and damages are not
awarded, VGAA may not be able to recover its potential losses and expenses
incurred due to the breach of the Sub-License agreement. See "Item 3. Legal
Proceedings" for further discussion.
Tun Resources Ltd. - Yuntong Sino Foreign Joint Venture and Lutong Sino
Foreign Joint Venture Gold Projects
On May 2, 2000, VGAA entered into a share purchase and sale agreement with
Golden Thunder Resources Ltd. ("Golden Thunder") to purchase from Golden Thunder
approximately eighty percent (80%) of the issued and outstanding shares of
common stock of Tun Resources Ltd., a Canadian corporation ("Tun Resources"),
with an option to purchase the remaining twenty percent (20%) of the issued and
outstanding shares of Tun Resources (the "Acquisition Agreement"). Pursuant to
the terms of the Acquisition Agreement, VGAA will (i) provide a total of
$1,180,000 by August 15, 2000 to fund current Tun Resources joint venture
projects, (ii) issue 1,600,000 shares of its restricted common stock to Golden
Thunder in exchange for the approximate eighty percent (80%) of the issued and
outstanding shares of common stock of Tun Resources and an option to purchase
the remaining twenty percent (20%), and (iii) be solely responsible for the
future funding of Tun Resources and its joint ventures. As of the date of this
Annual Report, VGAA has issued 1,600,000 shares of its restricted common stock
to Golden Thunder and has provided approximately $490,000 of funds to Tun
Resources. Tun Resources is the major stakeholder in two gold exploration and
development Sino Foreign joint ventures in the Yunnan Province of China.
<PAGE>
Tun Resources Ltd. - Yuntong Sino Foreign Joint Venture
Tun Resources owns an approximate eighty-two percent (82%) joint venture
interest in the Yuntong Sino Foreign Joint Venture, which consists of a gold
concession comprising approximately 30 square kilometers (the "Yuntong Joint
Venture"). Management of VGAA believes that the gold concession contains
approximately 4.2 to 4.6 g/t surface deposits with an approximate 100,000 ounce
gold resource. As of the date of this Annual Report, detailed geological reports
are in place including column leach testing. Tun Resources is preparing to begin
mine construction of two surface gold heap leaching operations. Management of
VGAA believes that such operations may result in the production of approximately
10,000 ounces of gold per annum from the two deposits. All mining production
permits for this concession are in place and management of VGAA believes that
such mining operations will commence during the fourth quarter of 2000.
Moreover, the Yuntong Joint Venture has executed a definitive agreement to
acquire two additional gold deposits which, when combined with the gold
concession comprising approximately 30 square kilometers, management believes
will have drilled indicated resources of approximately 803,000 ounces of gold.
These two additional gold deposits adjoin the 30 square kilometer gold
concession discussed above. Tun Resources plans to conduct due diligence,
definition drilling and feasibility studies on these two gold deposits by
approximately the beginning of the fourth quarter of 2000.
Tun Resources Ltd. - Lutong Sino Foreign Cooperative Joint Venture
Tun Resources also owns an approximate eighty percent (80%) joint venture
interest in the Lutong Project, which consists of a gold exploration concession
comprising approximately 100 square kilometers in the same province.
Ailaoshan Gold Project
On May 4, 2000, VGAA entered into a letter agreement with the No. 1
Geological Brigade of the Yunnan Bureau of Geology and Mineral Resources of
Qujing City, Yunnan Province, China (the "Letter Agreement"), whereby VGAA has
the right to acquire an approximate 70% joint venture interest in the Ailaoshang
gold concession and prospect with claims that include the Xiaoshuijing gold
reserve located in the Chuxion Prefecture, Yunnan Province, China. Management
anticipates that it will take approximately three months from the date of this
Annual Report to conduct due diligence on the gold reserve by confirmation and
test drilling, and expects geological reports to provide the basis for
negotiation of the final terms of a Sino Foreign Cooperative joint venture
agreement, should the due diligence warrant continuing such negotiations.
According to the terms of the Letter Agreement, management anticipates that VGAA
will invest up to $2,500,000 to expand the gold reserve and increase mine
production and that the No. 1 Geological Brigade will contribute the property,
exploration and mining rights, permits, land use rights and other work to date
completed on the gold reserve.
<PAGE>
As of the date of this Annual Report, VGAA has engaged an independent
professional geologist, Mr. David Taylor. Mr. Taylor recently conducted due
diligence on the Xiaoshuijing gold reserve, which included a site visit on May
15 through May 17, 2000, confirmations and inspections, and review of all
previous geological and development data. On June 16, 2000, Mr. Taylor issued an
independent geological report regarding the Xiaoshuijing gold reserve.
Management believes that the report concurs with VGAA's direction and current
assessment activities to: (i) provide further capital investment in the mine and
surrounding area to increase the quantity and category of reserves, (ii)
increase current production to maximize the benefits of the economics of scale
and the low-cost mining possible at Xiaoshuijing, and (iii) conduct further
exploration on anomalous areas defined in the geochemical surveys. VGAA is
continuing its due diligence of the Xiaoshuijing gold reserve.
Lemachang Silver Project
On March 27, 2000, VGAA entered into an agreement with the No. 1 Geological
Brigade of Yunnan Bureau of Geology and Mineral Resources of Qujing City, Yunnan
Province, China (the "Lemachang Agreement"), whereby VGAA will have the right to
acquire a majority joint venture interest in the Lemachang silver mine.
Management anticipates that it will take approximately three months from the
date of this Annual Report to conduct due diligence on the silver mine, and
expects geological reports to provide the basis for negotiation of the final
terms of a joint venture agreement, should the due diligence warrant continuing
such negotiations. Pursuant to the terms of the Lemachang Agreement, VGAA will
provide up to $4,000,000 U.S. (subject to appraisal) to fund (i) acceleration of
drilling on the Lemachang silver mine to expand the existing reserve, and (ii)
undertake production engineering feasibility studies to ultimately increase
production and output to an annual target of 1,000,000 ounces of metallic
silver.
The Lemachang silver mine is a producing three-year old silver mine located
in the Ludian County Seat, Yunnan Province. Based on due diligence conducted by
management of VGAA on the Lemachang silver mine, management believes that the
Lemachang silver mine has a daily processing capacity of approximately 300
tonnes of ore, resulting in an annual potential production of approximately
600,000 ounces of silver. The Lemachang silver mine site includes a drill proven
resource of approximately 13,000,000 ounces with an additional 27,000,000 ounces
inferred resource. Global reserves for the entire exploration and mining lease
of 5.26 km. length are put at 9,060,200 tones of ore at 221.99 g/tonne silver
containing 2,011.3 tonnes of silver" (62,550,000 oz.). "This includes all
categories of ore but is of course, primarily E (possible) reserves." Management
of VGAA believes that the Lemachang silver mine and surrounding area's
mineralization potential has not been fully ascertained.
As of the date of this Annual Report, VGAA has engaged the services of Mr.
David Taylor to also conduct due diligence on the Lemachang silver mine. Mr.
Taylor recently conducted due diligence on the Lemachang silver mine, which
included a site visit on May 9 through May 12, 2000, confirmations and
inspections, and review of all previous geological data and the current mining
area as well as the surrounding areas of geological interest to evaluate the
geological resources of the silver deposit. On June 16, 2000, Mr. Taylor issued
an independent geological report regarding the Lemanchang silver mine.
Management believes that the report concurs with VGAA's direction and current
assessment activities which include (i) upgrading mineral processing recovery of
the mine, (ii) production of metallic silver at the mine site, (iii) impart
western management techniques to current mine management, (iv) definitive
drilling of ore blocks to upgrade reserve categories, and (v) identify large
bodies of mineralization within the known surface and drill located occurrences,
to be followed by further drilling. Management of VGAA is continuing its due
diligence, reviewing financial information regarding the Lemachang silver mine
and, if due diligence is completed to the satisfaction of management, future
objectives are to increase mining of the Lemachang silver mine from 300 tonnes
per day to 500 tonnes per day, with an anticipated annual production of
1,000,000 ounces.
<PAGE>
Investment in Other Ventures
VGAA's prospective acquisition of the majority joint venture interest in
the Lemachang silver mine, based on satisfactory due diligence results, would be
VGAA's first proposed business activity relating to non-gold precious metals
interests. As of the date of this Annual Report, management is developing a
diversified international resources exploration, development and production
program. Management intends to focus VGAA's business activities on the
operational and production aspects of gold and silver projects through its
current and proposed joint venture interests, as well as resource-based
diversification to other commodities and opportunities. Management believes that
it is in the best interests of VGAA to diversify VGAA's business activities to
avoid reliance on a single commodity.
ITEM 2. DESCRIPTION OF PROPERTIES
Except as described above, VGAA does not own any other real estate or other
properties. VGAA leases office space and its offices are located at 4600 South
Ulster Street, Suite 240, Denver, Colorado 80237.
ITEM 3. LEGAL PROCEEDINGS
On September 27, 1999, Geneva and INGC, on behalf of IGCO, initiated legal
proceedings against AuRIC and Dames & Moore by filing its complaint in the
District Court of the Third Judicial District for Salt Lake City, State of Utah.
INGC and AuRIC had entered into an agreement for services whereby AuRIC
agreed to perform certain services, including the development of proprietary
technology and know-how relating to fire and chemical assay analysis techniques
and metallurgical ore extraction procedures developed specifically for INGC's
and IGCO's property. Dames & Moore verified the fire and chemical assay
techniques and procedures developed by AuRIC and their repeatability, as well as
metallurgical recovery verification. IGCO subsequently entered into multiple
work orders with Dames & Moore relating to a variety of services. Geneva and
AuRIC entered into the License Agreement whereby AuRIC agreed to (i) supply the
proprietary technology to Geneva, (ii) grant to Geneva a license to use such
technology on adjacent claims and the right to sub-license the proprietary
technology to VGAA for use on the Vega Property. VGAA and Geneva entered into
the Sub-License Agreement whereby VGAA acquired from Geneva a sub-license to
utilize AuRIC's proprietary information and related precious metals recovery
processes on the Vega Property.
<PAGE>
On September 27, 1999, Geneva and INGC, on behalf of IGCO, initiated legal
proceedings against AuRIC for: (i) multiple breaches of contract relating to the
establishment and facilitation of the proprietary technology and fire assay
procedures developed by AuRIC at an independent assay lab and failure to deliver
the proprietary technology and procedures to Geneva; (ii) breach of the implied
covenant of good faith and fair dealing; (iii) negligent misrepresentation; (iv)
specific performance, (v) non-disclosure injunction; (vi) failure by AuRIC to
repay advances, and (vii) quantum meruit/unjust enrichment. INGC, on behalf of
IGCO, also named Dames & Moore in the legal proceeding in a declaratory relief
cause of action.
On October 8, 1999, Geneva and INGC, on behalf of IGCO, amended its
complaint by naming as defendants AuRIC, Dames & Moore, Ahmet Altinay General
Manager of AuRIC, and Richard Daniele, Chief Metallurgist for Dames & Moore and
specifying damages in excess of $10,000,000. The damages sought by Geneva and
INGC, on behalf of IGCO, are based on the general claims and causes of action
set forth in the amended complaint relating to reliance on the assays and
representations made by AuRIC, the actions and engineering reports produced by
Dames & Moore and, specifically, the negligent misrepresentations and
inaccuracies contained within some or all of those Dames & Moore reports and
breaches of contract by AuRIC and Dames & Moore.
On June 21, 2000, INGC and Geneva filed a second amended complaint in the
District Court of the Third Judicial District for Salt Lake City, State of Utah.
The second amended complaint increased detail regarding the alleged breaches of
contract and increased causes of action against other parties involved by adding
two new defendants, MBM Consulting, and Dr. Michael B. Merhtens, who provided
consulting services to INGC. The amendment also added certain claims of other
entities involved through Geneva.
As of the date of this Annual Report, the legal proceedings have not
evolved to the point where potential damages have been evaluated, estimated or
proven. Management believes that the legal proceedings will prove that the
proprietary technology is either valid or invalid.
If, during the legal proceedings, the proprietary technology is proven to
be valid and transferable, then VGAA will ultimately receive from Geneva its
contractual benefits under the Sub-License Agreement and proceed with
exploration of the Vega Property at a future date. If the proprietary technology
is proven to be invalid and not transferable, and INGC/Geneva are not successful
in the outcome of the litigation and damages are not awarded, VGAA may not be
able to recover its potential losses and expenses incurred due to the breach of
the Sub-License Agreement by Geneva. However, if the proprietary technology is
proven to be invalid and not transferable, and INGC/Geneva are successful in the
outcome of the litigation, INGC/Geneva may then receive damages from AuRIC and
Dames & Moore. Geneva's damages result primarily from its inability to transfer
the proprietary technology to VGAA in accordance with the provisions of the
Sub-License Agreement. Management believes that VGAA will, under these
circumstances, be entitled to receive a pro-rata portion of the awarded damages
for potential losses incurred due to the breach of the Sub-License Agreement by
Geneva. VGAA and Geneva have entered into an assignment agreement dated May 9,
2000 (the "Assignment Agreement") that transferred and conveyed to Geneva the
potential claims and causes of action that VGAA may have under the Sub-License
Agreement with Geneva. If damages are recovered in the lawsuit initiated by
Geneva and INGC, on behalf of VGAA, VGAA will receive a pro rata share of such
damages relating to its claims and causes of action in relation to all other
claims and causes of action for which damages are recovered. Thus, Geneva will
receive any such pro rata share of the damages recovered pursuant to the terms
and provisions of the Assignment Agreement.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of VGAA's shareholders through the
solicitation of proxies or otherwise during fiscal year ended March 31, 2000.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
Vega-Atlantic Corporation's common stock is traded on the OTC Bulletin
Board under the symbol "VGAA". The market for VGAA's common stock is limited,
volatile and sporadic. The following table sets forth the high and low sales
prices relating to VGAA's common stock for the last two fiscal years. These
quotations reflect inter-dealer prices without retail mark-up, mark-down, or
commissions, and may not reflect actual transactions.
FISCAL YEARS ENDED
--------------------------------------------------
MARCH 31, 2000 MARCH 31, 1999
--------------------------------------------------
HIGH BID LOW BID HIGH BID LOW BID
--------------------------------------------------
First Quarter* $0.23 $0.080 $1.00 $0.34
Second Quarter $0.125 $0.040 $0.36 $0.10
Third Quarter $0.35 $0.05 $0.19 $0.125
Fourth Quarter $1.00 $0.125 $0.16 $0.080
*Figures represent first quarter as of June 30, 1999, second quarter as of
September 30, 1999, third quarter as of December 31, 1999 and fourth quarter as
of March 31, 2000. For first quarter ended June 30, 2000, the high bid and low
bid were $0.68 and $0.18, respectively.
Holders
As of May 30, 2000, VGAA had approximately 61 shareholders of record.
<PAGE>
Dividends
No dividends have ever been declared by the board of directors of VGAA on
its common stock. VGAA's losses do not currently indicate the ability to pay any
cash dividends, and VGAA does not indicate the intention of paying cash
dividends on its common stock in the foreseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
VGAA Audited Financial Statements
The following discussions of the results of operations and financial
position of VGAA should be read in conjunction with the financial statements and
notes pertaining to them that appear elsewhere in this Form 10-KSB.
General
As of the date of this Annual Report, VGAA has not generated revenues from
operations. During the prior fiscal years, VGAA focused primarily on the
exploration of the Vega Property and generated no revenues. During those prior
fiscal years, VGAA relied upon internally generated funds and advances, funds
from the sale of shares of stock and loans from its shareholders and private
investors to finance its operations and growth. As of the date of this Annual
Report, management has identified additional business opportunities, including
Tun Resources, the Lemachang silver mine, and the Xiaoshuijing gold reserve,
that it plans to pursue pertaining to the exploration of gold and silver.
Management intends to continue its search for other business opportunities in
any geographical area involving the exploration of gold and silver.
Results of Operation
For Fiscal Year Ended March 31, 2000 compared with Fiscal Year Ended March
31, 1999
VGAA's net losses for fiscal year ended March 31, 2000 were approximately
$1,091,711 compared to a net loss of approximately $1,213,701 for fiscal year
ended March 31, 1999. During both fiscal years ended March 31, 2000 and 1999,
respectively, VGAA recorded to income.
During fiscal year ended March 31, 2000, VGAA recorded operating expenses
of $968,968 compared to $1,180,597 of operating expenses recorded during fiscal
year ended March 31, 1999. During fiscal year ended March 31, 2000, VGAA
incurred exploration expenses for due diligence and payment of advances relating
to Tun Resources and the Lemachang Agreement of $140,000 and $31,000,
respectively, while operating expenses decreased during this period due to the
expensing of $783,182 during fiscal year ended March 31, 1999 that VGAA paid
pursuant to the Sub-License Agreement as research and development.
<PAGE>
Administrative expenses increased by $412,637 during fiscal year ended
March 31, 2000 from the $338,013 incurred during fiscal year ended March 31,
1999 as compared to the $750,650 incurred during fiscal year ended March 31,
2000. The increase in administrative expenses was primarily due to the increase
in overhead and administration expenses to $679,500 incurred during fiscal year
ended March 31, 2000 as compared to $300,000 during fiscal year ended March 31,
1999. This increase is due primarily to increased scale and scope of overall
activity. While VGAA incurred $679,500 of overhead and administration expenses,
approximately $707,800 was paid to Investor Communications International, Inc.
("ICI") for amounts due and owing for managerial, administrative and financial
services rendered and/or advances made, of which $706,000 was exchanged via debt
settlement for shares of restricted Common Stock at $0.50 per share.
VGAA and ICI entered into a two-year consulting services and management
agreement dated April 1, 1999 whereby ICI will perform a wide range of
management, administrative, financial, marketing and public company services
including, but not limited to, the following: (i) international business
relations and strategy development, (ii) investor relations and shareholder
liaison, (iii) corporate public relations, press release and public information
distribution, (iv) property exploration management, including administration of
metallurgical development, metallurgical liaison, BLM liaison, engineering
company liaison, drilling administration, geologist liaison, mapping, survey and
catalogue, geostatistical liaison, environmental research, geological reports
compilation and due diligence efforts, (v) administration, including auditor and
legal liaison, media liaison, corporate minutebook maintenance and record
keeping, corporate secretarial services, printing and production, office and
general duties, and (vi) financial and business planning services, including
capital and operating budgeting, banking, bookkeeping, documentation, database
records, preparation of financial statements and creation of annual reports. See
"Item 10. Executive Compensation - Compensation of Officers and Directors".
Although VGAA has not and currently is not in the operational stage of
generating revenues, the services provided by ICI increased during fiscal year
ended March 31, 2000 and to date of this Annual Report include not only those
services listed above related to exploration, administration, public company
operations and maintenance of VGAA, but also involve the negotiation and
consummation of the Acquisition Agreement relating to Tun Resources and the
negotiation and due diligence of the Letter Agreement relating to the Ailaoshan
joint venture and the Lemachang joint venture. Moreover, with commencement of
the legal proceedings involving INGC/Geneva and AuRIC/Dames & Moore, ICI is
continuously sourcing, identifying, investigating and negotiating new business
opportunities to present to the board of directors of VGAA. Other services
provided by ICI include securing of short-term advance financing and sourcing of
private placement funding.
Interest expense increased to $122,743 during fiscal year ended March 31,
2000 as compared to interest expense of $33,104 during fiscal year ended March
31, 1999. This substantial increase in interest expense is due primarily to
accrual of interest on notes payable to Geneva Resources, Inc. and AuRIC
Metallurgical Laboratories LLC relating to the Sub-License Agreement.
<PAGE>
As discussed above, the slight decrease in net loss during fiscal year
ended March 31, 2000 as compared to fiscal year ended March 31, 1999 is
attributable primarily to the expensing during fiscal year ended March 31, 1999
of research and development costs that VGAA incurred pursuant to the Sub-License
Agreement, combined with offsetting administrative and interest expenses
increases incurred during fiscal year ended March 31, 2000 as compared to fiscal
year ended March 31, 1999. VGAA's net earnings (losses) during fiscal year ended
March 31, 2000 were approximately ($1,091,711) or ($0.062) per common share
compared to a net loss of approximately ($1,213,701) or ($0.083) per common
share during fiscal year ended March 31, 1999. The weighted average number of
diluted shares outstanding were 17,596,262 for fiscal year ended March 31, 2000
compared to 14,600,890 for fiscal year ended March 31, 1999.
Liquidity and Capital Resources
For Fiscal Year Ended March 31, 2000 and 1999
VGAA's financial statements have been prepared assuming that it will
continue as a going concern and, accordingly, do not include adjustments
relating to the recoverability and realization of assets and classifications of
liabilities that might be necessary should VGAA be unable to continue in
operations.
As of the date of this Annual Report, there is substantial doubt regarding
VGAA's ability to continue as a going concern as VGAA has not generated
sufficient cash flow to funds its business operations and material commitments.
VGAA's future success and viability, therefore, are dependent upon VGAA's
ability to successfully develop the lode mining claims and other joint ventures,
and the continuing ability to generate capital financing. Management is
optimistic that VGAA will be successful in its capital raising efforts; however,
there can be no assurance that VGAA will be successful in raising additional
capital. The failure to raise additional capital may have a material and adverse
effect upon VGAA and its shareholders. See "Item 6. Management's Discussion and
Analysis or Plan of Operation - Material Commitments."
On March 1, 2000, VGAA commenced an offering to sell 5,000,000 shares of
Common Stock at $0.25 per share, for an aggregate offering of $1,250,000. The
securities are not registered under the Securities Act of 1933, as amended (the
"Securities Act"), and are therefore being offered pursuant to Regulation S to
only non-residents of the United States. As of the date of this Annual Report,
VGAA has received approximately $140,000 in proceeds from the sale of the
securities. Management has used approximately 100% of the $140,000 proceeds
received for VGAA's funding requirements pursuant to the terms of the
Acquisition Agreement.
Based upon a twelve-month work plan proposed by management, it is
anticipated that such a work plan would require approximately $8,000,000 of
financing designed to fund various commitments and business operations, which
include the possible work programs designed for exploration of the Vega Property
and the financial contractual commitments arising pursuant to acquisition of Tun
Resources as well as other proposed acquisitions. From the date of this Annual
Report, management believes that VGAA can satisfy its cash requirements for
approximately the next four months based on its private placement offering and
its ability to obtain advances from certain investors and related investors, if
necessary.
<PAGE>
As of March 31, 2000, VGAA's current assets were $240,328 and its current
liabilities were $1,018,624. As of March 31, 2000, the current liabilities
exceeded current assets by $778,296. As of March 31, 1999, VGAA's current assets
were $404 and its current liabilities were $857,452. As of March 31, 1999, the
current liabilities exceeded current assets by $857,048.
The increase in current assets in fiscal year ended March 31, 2000 was due
primarily to an increase in cash and stock subscriptions receivable relating to
VGAA's private placement offering.
The increase in current liabilities in fiscal year ended March 31, 2000 was
due primarily to an increase in accounts payable of $198,340 from $18,407 in
fiscal year ended March 31, 1999 to $216,747 in fiscal year ended March 31,
2000, relating to increasing scale and scope of activities and joint venture
prospects.
Stockholders' Equity (deficit) decreased from ($857,048) for fiscal year
ended March 31, 1999 to ($778,296) for fiscal year ended March 31, 2000.
Unaudited Pro Forma Condensed Financial Statements
Statements of Operations for Fiscal Years Ended March 31, 2000 and March
31,1999
The pro forma statements of operations for fiscal years ended March 31,
2000 and 1999 reflect the statements of operation of VGAA and of Tun Resources.
Pro forma adjustments have been made to give effect to these transactions as if
they had occurred as of April 1, 1999 and April 1, 1998, respectively.
For fiscal year ended March 31, 2000 and 1999, VGAA's net losses were
approximately $1,091,711 and $1,213,701, respectively, and Tun Resources' net
losses were approximately $203,325 and $82,000, respectively. Since future
profits related to Tun Resources' joint venture interests could not be estimated
until additional exploration is performed, the value of VGAA's joint venture
investment has been impaired. Therefore, for fiscal year ended March 31, 2000
and 1999, VGAA would have recorded the impairment loss as an operating expense
in the amount of $231,999 and $3,339,088, respectively, resulting in a proforma
consolidated operating loss of $1,527,035 and $4,634,789, respectively. Proforma
consolidated net losses during fiscal year ended March 31, 2000 would have been
($1,527,035) or ($0.075) per share compared to proforma consolidated net losses
during fiscal year ended March 31, 1999 of ($4,634,789) or ($0.244) per share.
The proforma weighted average number of consolidated common shares outstanding
would have been 19,196,262 for fiscal year ended March 31, 2000 compared to
16,200,890 for fiscal year ended March 31, 1999.
<PAGE>
Liquidity and Capital Resources - Unaudited Pro forma Condensed Balance
Sheet for Fiscal Year ended March 31, 2000
As of March 31, 2000, VGAA's and Tun Resources' assets were $100,328 and
$4675, respectively, resulting in proforma consolidated assets in the amount of
$105,004. The joint venture investment would have been valued at $908,259,
however, since any future profits relating to Tun Resources' joint venture
interests could not be estimated until additional exploration is performed, VGAA
would have fully impaired the value of its joint venture investment of $908,259.
As of March 31, 2000, VGAA's and Tun Resources' liabilities were $1,018,624 and
$140,000, respectively, resulting in proforma consolidated liabilities in the
amount of $1,018,624. The intercompany liability of $140,000 has been
eliminated.
Material Commitments
A significant and estimated commitment for VGAA for fiscal year April 1,
2000 through March 31, 2001 pertaining to contractual arrangements is VGAA's
contractual funding obligations under the Acquisition Agreement. Pursuant to the
terms of the Acquisition Agreement, VGAA will provide a total of $1,180,000 by
August 15, 2000 to fund current Tun Resources joint venture projects. As of the
date of this Annual Report, VGAA has provided approximately $640,000 of funds to
Tun Resources.
A significant and estimated commitment for VGAA for fiscal year 2001
pertaining to contractual arrangements and work orders is an amount not greater
than $900,000 to ICI. The contractual arrangements between VGAA and ICI
regarding compensation for services rendered for the day-to-day operations of
VGAA are based on a fee not to exceed $75,000 per month based upon the
performance of actual services rendered by ICI on an ongoing basis commensurate
with the needs and requirements of VGAA for that particular month, including
services related to exploration, administrative, public company operations, and
maintenance.
A significant and estimated commitment for VGAA for fiscal year 2001 are
the promissory notes issued pursuant to the Sub-License Agreement. Pursuant to
the terms and provisions of the Sub-License Agreement, VGAA issued promissory
notes to both Geneva and AuRIC in the amount of $250,000, respectively. These
are 3% interest bearing notes and are payable upon the transfer of the
technology. However, there is a chance that the technology pursuant to the
Sub-license Agreement may never be transferred, in which case, the INGC/Geneva
legal proceedings may create a situation, if damages are awarded, whereby the
outcome of said legal proceedings may lead to future possible awards for damages
to the Company.
A significant and estimated commitment for VGAA for fiscal year 2001 is the
promissory note in the amount of $100,000 issued to Geneva pursuant to the
Sub-License Agreement. The promissory note is convertible into 500,000 shares of
VGAA's restricted Common Stock at the option of Geneva after October 15, 1999 at
the rate of $0.20 per share. There are no conditions that will prevent or
trigger the conversion of the promissory note by Geneva into shares of Common
Stock nor is there any expiration date. As of the date of this Annual Report,
VGAA has not made any payments of either principal or interest on the promissory
note, nor has Geneva exercised its conversion rights.
<PAGE>
A significant and estimated commitment for VGAA for fiscal year 2001 is
payment of the Federal annual mining claims maintenance fees in the approximate
amount of $50,000 and the annual county fees in the approximate amount of $1,000
for the Vega Property.
ITEM 7. FINANCIAL STATEMENTS
The information required under Item 310(a) of Regulation S-B is included in
this report as set forth in the "Index to Financial Statement".
Index to Financial Statements
Vega-Atlantic Corporation
Independent Auditor's Report dated June 16, 2000.
Balance Sheet for fiscal year ended March 31, 2000 and March 31, 1999.
Statements of Operations for period from April 1, 1999 to March 31, 2000,
period April 1, 1998 to March 31, 1999, and from inception (January 28,
1987) to March 31, 2000.
Statement of Cash Flow for period from April 1, 1999 to March 31, 2000,
period April 1, 1998 to March 31, 1999, and from inception (January 28,
1987) to March 31, 2000.
Statements of Stockholders' Equity (Deficit) for years ended March 31, 1987
through fiscal year ended March 31, 2000.
Notes to Financial Statements for March 31, 2000 and 1999.
Vega-Atlantic Corporation
Proforma Condensed Financial Statements
Unaudited Proforma Condensed Balance Sheet for period ended March 31, 2000.
Unaudited Proforma Condensed Statements of Operations for fiscal year ended
March 31, 2000 and 1999.
Unaudited Proforma Condensed Financial Statements Schedule of Assumption
and Explanatory Notes.
<PAGE>
VEGA-ATLANTIC CORPORATION
(An Exploration Stage Company)
FINANCIAL STATEMENTS
March 31, 2000
TABLE OF CONTENTS
Page
----
Independent Auditors' Report F-2
Balance Sheet F-3
Statements of Operations F-4 - F-5
Statements of Cash Flow F-6
Statement of Stockholders' Equity F-7 - F-9
Notes to Financial Statements F-10 - F-19
F-1
<PAGE>
Johnson, Holscher & Company, P.C.
Certified Public Accountants
Stockholders and Board of Directors
Vega Atlantic Corporation
INDEPENDENT AUDITORS' REPORT
----------------------------
We have audited the balance sheets of Vega Atlantic Corporation (the Company),
as of March 31, 2000, and 1999, and the related statements of operations,
stockholders' equity (deficit) and cash flows for the years ended March 31, 2000
and 1999 and for the period from inception (January 28, 1987) to March 31, 2000.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Vega Atlantic Corporation as of
March 31, 2000 and 1999, and the results of its operations and its cash flows
for the years ended March 31, 2000 and 1999, and for the period from inception
(January 28, 1987) to March 31, 2000, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has not generated revenues from operations,
has a working capital deficit of $778,296 and a stockholders' deficit of
$778,296, which raises substantial doubt about its ability to continue as a
going concern. The Company has established a plan to continue operations through
additional stock offerings and advances as outlined in Note 1. The financial
statements do not include any adjustments that might result if management's plan
is unsuccessful.
/s/ Johnson, Holscher & Company, P.C.
-------------------------------------
Johnson, Holscher & Company, P.C.
Greenwood Village, Colorado
June 16, 2000
F-2
<PAGE>
<TABLE>
<CAPTION>
VEGA-ATLANTIC CORPORATION
(An Exploration Stage Company)
Balance Sheets
March 31, March 31,
2000 1999
----------- -----------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 100,328 $ 279
Stock subscriptions receivable 140,000 --
----------- -----------
Total Current Assets 240,328 279
OTHER
Deposits -- 125
----------- -----------
Total Assets $ 240,328 $ 404
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
Accounts payable - trade $ 216,747 $ 18,407
Advances from related parties 125,602 197,492
Notes payable - Technology sublicense 600,000 569,446
Directors fees payable 47,767 40,267
Accrued interest payable 28,508 31,840
----------- -----------
Total Current Liabilities 1,018,624 857,452
----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock, no par value;
20,000,000 shares authorized at March 31, 2000 and 1999
0 shares issued and outstanding at March 31, 2000, and 1999 -- --
Common stock $.00001 par value;
500,000,000 shares authorized at March 31, 2000 and 1999; 560,000 and 0 shares subscribed and
19,646,000 and 17,585,000 shares issued and outstanding at March 31, 2000 and 1999 202 176
Paid - in capital 5,164,253 3,993,816
Accumulated deficit through exploration stage (5,942,751) (4,851,040)
----------- -----------
Total Stockholders' Equity (778,296) (857,048)
----------- -----------
Total Liabilities and Stockholders' Equity $ 240,328 $ 404
=========== ===========
See the accompanying summary of accounting policies and notes to financial statements.
F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VEGA-ATLANTIC CORPORATION
(An Exploration Stage Company)
Statements of Operations
Inception
(January 28,
1987) to
For the 3 Months Ended Mar. 31, For the 12 Months Ended Mar. 31, March 31,
2000 1999 2000 1999 2000
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES
Sales $ -- $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------ ------------
Total Revenues -- -- -- -- --
COST OF SALES -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Gross Profit -- -- -- -- --
------------ ------------ ------------ ------------ ------------
EXPLORATION EXPENSES
Research and development -- 783,182 -- 783,182 783,182
Claims maintenance fees -- -- 21,300 50,704 72,004
Claims exploration services (2,145) -- 1,937 -- 1,937
Claims staking and mangement -- -- 1,935 8,698 38,443
Acquisition due dilligence (Impairment loss) 22,146 -- 22,146 -- 22,146
Joint Venture Advances (Impairment loss)
Luomachang 31,000 -- 31,000 -- 31,000
Tun Resources 140,000 -- 140,000 -- 140,000
------------ ------------ ------------ ------------ ------------
Total Exploration Expenses 191,001 783,182 218,318 842,584 1,088,712
ADMINISTRATIVE EXPENSES
Overhead and administration 129,700 75,000 679,500 300,000 2,154,582
Legal and accounting 14,157 (14,669) 22,551 21,097 87,756
Transfer agent fees 750 (1,840) 1,550 6,085 14,120
Director's fees 3,000 1,500 7,500 6,000 36,000
Other administrative costs 18,400 (6,907) 24,549 4,831 103,031
Consultants 15,000 -- 15,000 -- 96,076
------------ ------------ ------------ ------------ ------------
Total Administrative Expenses 181,007 53,084 750,650 338,013 2,491,565
------------ ------------ ------------ ------------ ------------
Loss from Continued Operations (372,008) (836,266) (968,968) (1,180,597) (3,580,277)
------------ ------------ ------------ ------------ ------------
Discontinued Operations:
Loss from discontinued operations of subsidiary
Century Manufacturing, Inc. -- -- -- -- (1,787,000)
Loss from Loan Advances to subsidiary, Century
Manufacturing, Inc. written off -- -- -- -- (590,773)
Gain on Disposal of subsidiary Century
Manufacturing, Inc. -- -- -- -- 171,144
------------ ------------ ------------ ------------ ------------
Net Loss from Discontinued Operations -- -- -- -- (2,206,629)
------------ ------------ ------------ ------------ ------------
Net Loss from Operations (372,008) (836,266) (968,968) (1,180,597) (5,786,906)
------------ ------------ ------------ ------------ ------------
Table continues of following page.
F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VEGA-ATLANTIC CORPORATION
(An Exploration Stage Company)
Statements of Operations
(Continued)
Inception
(January 28,
1987) to
For the 3 Months Ended Mar. 31, For the 12 Months Ended Mar. 31, March 31,
2000 1999 2000 1999 2000
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
OTHER INCOME (EXPENSE)
Interest Income -- -- -- -- 2
Interest Expense (36,848) (10,989) (122,743) (33,104) (155,847)
------------ ------------ ------------ ------------ ------------
Total Other Income (Expense) (36,848) (10,989) (122,743) (33,104) (155,845)
------------ ------------ ------------ ------------ ------------
NET (LOSS) $ (408,856) $ (847,255) $ (1,091,711) $ (1,213,701) $ (5,942,751)
============ ============ ============ ============ ============
Earnings (Loss) Per Share - Basic $ (0.023) $ (0.057) $ (0.062) $ (0.083) $ (0.938)
============ ============ ============ ============ ============
Weighted Average Number of
Common Shares Outstanding 17,630,297 14,813,333 17,596,262 14,600,890 6,337,417
============ ============ ============ ============ ============
See the accompanying summary of accounting policies and notes to financial statements.
F-5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VEGA-ATLANTIC CORPORATION
(An Exploration Stage Company)
Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
Inception
(January 28,
For the 3 Months Ended For the 12 Months Ended 1987) to
Mar. 31, Mar. 31, March 31,
2000 1999 2000 1999 2000
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (408,856) $ (847,255) $(1,091,711) $(1,213,701) $(5,942,751)
Adjustments to reconcile net (loss) to cash
Non-cash loss on sale of subsidiary -- -- -- -- 1,687,000
Non-cash research and development expenses -- 783,182 -- 783,182 783,182
Non-cash interest recognized through
discount adjustment 4,304 1,264 30,554 1,264 31,818
Non-cash stock issued in settlement of
payables and for services -- 5,841 -- -- 84,992
Changes in Assets and Liabilities
Deposits 125 -- 125 -- --
Accounts payable 197,821 (30,131) 198,340 (24,265) 216,747
Directors fees payable 3,000 1,500 7,500 6,000 47,767
Accrued interest payable 32,544 9,725 92,189 31,840 124,029
----------- ----------- ----------- ----------- -----------
Net Cash Flows Used for Operating Activities (171,062) (75,874) (763,003) (415,680) (2,967,216)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from affiliates - net 401,152 (224,000) 1,003,052 114,800 1,200,544
Purchase of subsidiary -- -- -- -- (100,000)
Advance to Golden Cycle De Panama 10,000 -- -- -- --
Sale of stock, net of offering costs -- 300,000 -- 300,000 2,107,000
----------- ----------- ----------- ----------- -----------
Net Cash Flows Provided by
Financing Activites 411,152 76,000 1,003,052 414,800 3,207,544
----------- ----------- ----------- ----------- -----------
Net increase in cash 240,090 126 240,049 (880) 240,328
Cash and cash equivalents - Beginning of period 238 153 279 1,159 --
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents - End of period $ 240,328 $ 279 $ 240,328 $ 279 $ 240,328
=========== =========== =========== =========== ===========
NON-CASH ACTIVITIES
During 1987, 750,000 shares of common stock worth $850 were issued for services performed.
During 1989, 8,500,000 shares of common stock with a value of $1,000 were issued for services performed.
During 1996, Century Manufacturing, Inc. was purchased for $100,000 through an advance to Century and the issuance of 1,000,000
shares of common stock valued at $1,687,000.
During 1997, a $50,000 advance from an affiliate was repaid through issuance of stock.
During 1997, Century Manufacturing, Inc. was sold to related parties in exchange for reductions in advances from those parties.
During the 1999 fiscal year, the Company issued 500,000 common shares in exchange for $75,000 in mining claims.
During the 1999 fiscal year, the Company entered into $600,000 of loan agreements in exchange for a technology sub-license.
During the 1999 fiscal year, the Company issued 1,000,000 shares of common stock worth $140,000 pursuant to a technology
sub-license agreement.
During the 2000 fiscal year, the Cmpany issued 2,061,000 shares of common stock worth $1,030,463 in settlement of advances.
The Company has accrued interest expense of $124,029 on advances and notes, has recognized an additional $33,818 of interest
through discount adjustments and has paid interest of $95,521 through the issuance of stock in settlement of advances.
See the accompanying summary of accounting policies and notes to financial statements.
F-6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VEGA-ATLANTIC CORPORATION
(An Exploration Stage Company)
Statements of Stockholders' Equity
(Continued)
Deficit
Accumulated
Common Stock During
-------------------- Paid - in Exploration
Shares Amount Capital Stage Total
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Issued for services performed,
February 25 ($.0125 per share) 20,000 $ 1 $ 249 $ -- $ 250
Issued for services performed,
February 25 ($.02 per share) 5,000 -- 100 -- 100
Issued for services performed,
February 25 ($.0007 per share) 725,000 7 493 -- 500
Net Loss, Year ended December 31, 1987 -- -- -- (8,791) (8,791)
--------- --------- --------- --------- ---------
Balance, December 31, 1987 750,000 8 842 (8,791) (7,941)
Net loss, Year ended December 31, 1988 -- -- -- (1,000) (1,000)
--------- --------- --------- --------- ---------
Balance, December 31, 1988 750,000 8 842 (9,791) (8,941)
Issued for services performed,
July 20 ($.0001 per share) 4,250,000 42 958 -- 1,000
Net loss, Year ended December 31, 1989 -- -- -- (2,700) (2,700)
--------- --------- --------- --------- ---------
Balance, December 31, 1989 5,000,000 50 1,800 (12,491) (10,641)
Net loss, Year ended December 31, 1990 -- -- -- (875) (875)
--------- --------- --------- --------- ---------
Balance, December 31, 1990 5,000,000 50 1,800 (13,366) (11,516)
Net loss, Year ended December 31, 1991 -- -- -- (2,900) (2,900)
--------- --------- --------- --------- ---------
Balance, December 31, 1991 5,000,000 50 1,800 (16,266) (14,416)
Net loss, Year ended December 31, 1992 -- -- -- (1,235) (1,235)
--------- --------- --------- --------- ---------
Balance, December 31, 1992 5,000,000 50 1,800 (17,501) (15,651)
Net loss, Year ended December 31, 1993 -- -- -- (6,775) (6,775)
--------- --------- --------- --------- ---------
Balance, December 31, 1993 5,000,000 $ 50 $ 1,800 $ (24,276) $ (22,426)
--------- --------- --------- --------- ---------
See the accompanying summary of accounting policies and notes to financial statements.
F-7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VEGA-ATLANTIC CORPORATION
(An Exploration Stage Company)
Statements of Stockholders' Equity
(Continued)
Deficit
Accumulated
Common Stock During
-------------------------- Paid - in Exploration
Shares Amount Capital Stage Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993 5,000,000 $ 50 $ 1,800 $ (24,276) $ (22,426)
Net loss, Year ended December 31, 1994 -- -- -- (4,875) (4,875)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1994 5,000,000 50 1,800 (29,151) (27,301)
Capital Contribution from Shareholder,
April 17, 1995 -- -- 27,301 -- 27,301
Sale of stock, May 8, 1995
($.00001 par per share, $1.02 per share) 100,000 1 101,999 -- 102,000
Net loss, year ended December 31, 1995 -- -- -- (95,574) (95,574)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1995 5,100,000 51 131,100 (124,725) 6,426
Issuance of stock to purchase subsidiary,
March 28, 1996 ($.00001 par per share,
$1.687 per share) 1,000,000 10 1,686,990 -- 1,687,000
Net loss, quarter ended March 31, 1996 -- -- -- (23,357) (23,357)
----------- ----------- ----------- ----------- -----------
Balance, March 31, 1996 6,100,000 61 1,818,090 (148,082) 1,670,069
Sale of Stock, May 6, 1996 50,000 1 49,999 50,000
Sale of Stock, May 8, 1996 120,000 1 119,999 120,000
Sale of Stock, May 13, 1996 35,000 35,000 35,000
Sale of Stock, March 12, 1997 1,800,000 18 449,982 450,000
Sale of Stock, April 15, 1997 250,000 3 49,997 50,000
Issuance of Stock in repayment of
Advances, March 12, 1997 200,000 2 49,998 -- 50,000
Net loss, year ended March 31, 1997 -- -- -- (2,776,800) (2,776,800)
----------- ----------- ----------- ----------- -----------
Balance, March 31, 1997 8,555,000 86 2,573,065 (2,924,882) (351,731)
Sale of Stock, March 13, 1998 3,000,000 30 449,970 450,000
Sale of Stock, March 24, 1998 1,333,333 13 199,987 200,000
Sale of Stock, March 25, 1998 1,306,667 13 195,987 196,000
Sale of Stock, March 26, 1998 360,000 4 53,996 54,000
Net loss, year ended March 31, 1998 -- -- -- (712,457) (712,457)
----------- ----------- ----------- ----------- -----------
Balance, March 31, 1998 14,555,000 $ 146 $ 3,473,005 $(3,637,339) $ (164,188)
----------- ----------- ----------- ----------- -----------
See the accompanying summary of accounting policies and notes to financial statements.
F-8
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VEGA-ATLANTIC CORPORATION
(An Exploration Stage Company)
Statements of Stockholders' Equity
(Continued)
Deficit
Accumulated
Common Stock During
------------------------- Paid - in Exploration
Shares Amount Capital Stage Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, March 31, 1998 14,555,000 $ 146 $ 3,473,005 $(3,637,339) $ (164,188)
Issuance of common shares in exchange
for $5,841 ofaccounts payable, Jan. 15, 1999
($.00001 par per share, total $.195 per share) 30,000 -- 5,841 -- 5,841
Issuance of common shares in exchange
for technology license agreement, Mar. 15, 1999
($.00001 par per share, total $.14 per share)
valued at market price at date of issuance 1,000,000 10 139,990 -- 140,000
Issuance of common shares in exchange
for profit sharing interest, March 28, 1999
($.00001 per share, total $.15 per share)
valued at market price at date of issuance 500,000 5 74,995 -- 75,000
Issuance of SEC Reg D-504 common
shares for cash, March 31, 1999 ($.00001 par
per share, total $.20 per share) 1,500,000 15 299,985 -- 300,000
Net loss, Year ended March 31, 1999 -- -- -- (1,213,701) (1,213,701)
----------- ----------- ----------- ----------- -----------
Balance, March 31, 1999 17,585,000 176 3,993,816 (4,851,040) (857,048)
Issuance of common shares in settlement of
advances payable, March 29, 2000 ($.00001 par
per share, total $.50 per share) 2,061,000 20 1,030,443 -- 1,030,463
Stock subscription for Reg S common
shares ($.00001 par per share, total $.25
per share) 560,000 6 139,994 -- 140,000
Net loss, Year ended March 31, 2000 -- -- -- (1,091,711) (1,091,711)
----------- ----------- ----------- ----------- -----------
Balance, March 31, 2000 20,206,000 $ 202 $ 5,164,253 $(5,942,751) $ (778,296)
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements.
F-9
</TABLE>
<PAGE>
VEGA-ATLANTIC CORPORATION
(An Exploration Stage Company)
Notes to the Financial Statements
March 31, 2000
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Vega-Atlantic Corporation (the Company) was incorporated on January
28, 1987 under the laws of the State of Colorado. The Company is an
exploration stage company.
During 1999, the Company exchanged 500,000 restricted common shares
for a profit sharing interest in 213 unpatented lode-mining claims
located in the State of Idaho (Note 2). The exploration and
development of these claims had formed the basis of the Company's
operations. The Company is now attempting to expand its operations
into other geographical areas and other precious metals (Note 11).
Basis of Accounting
-------------------
The Company utilizes the accrual basis of accounting. Financial
statements have been prepared using generally accepted accounting
principles.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Research, Development and Exploration Costs
-------------------------------------------
Research, development and exploration costs are expensed as incurred.
Cash Equivalents
----------------
For purposes of the Statement of Cash Flows, cash equivalents are
defined as investments with original maturities of three months or
less.
Valuation of Stock Issued for Third Party Services
--------------------------------------------------
The Company values stock issued for services at the fair value of the
services provided, if known, or at the fair value of the equity
instruments issued.
Going Concern and Continued Operations
--------------------------------------
As of March 31,2000, there is substantial doubt regarding the
Company's ability to continue as a going concern as the Company has
not generated any revenues from operations, has a working capital
deficit of $778,296, and a stockholders' deficit of $778,296. The
Company's successful financial operations and movement into an
operating basis are contingent on the development of the lode mining
claims, or other joint ventures detailed in Note 11, and the
continuing ability of generating capital financing. The Company
intends to finance operations for the next twelve months through
additional common stock offerings and advances.
F-10
<PAGE>
VEGA-ATLANTIC CORPORATION
(An Exploration Stage Company)
Notes to the Financial Statements
March 31, 2000
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Earnings Per Share
------------------
As of March 31, 2000, there were no warrants or stock options granted
that would affect the earnings per share calculation. The Company had
notes payable that could be converted into 500,000 shares of common
stock. The conversion of the notes would have an anti-dilutive effect,
therefore, the Company has presented only the basic earnings per share
calculation. The basic earnings per share calculation has been
adjusted for the one for two reverse stock split occurring in 1995.
NOTE 2: STOCKHOLDERS' EQUITY
Common Stock
------------
During 1987 and 1989, the Company issued 10,000,000 shares of common
stock to then officers and directors in exchange for services
performed. Amounts representing the services were expensed in the
years performed.
Effective May 1, 1995, the Company adopted a reverse split of the
outstanding shares of common stock. Authorized shares and par value
remained unchanged.
On May 8, 1995, the Company sold 100,000 shares of common stock for
$102,000.
On March 28, 1996, the Company acquired 100 percent of the issued and
outstanding shares of Century Manufacturing, Inc., in exchange for the
Company issuing 1,000,000 shares of common stock. The Company's shares
were valued at $1,687,000 based on the market value of the common
stock as of the date of issuance. The Company also provided an
additional $100,000 in cash in the transaction. The Company later
transferred this ownership interest in Century with a related party in
partial repayment of advances from the related party.
On March 12, 1997, the Company issued 200,000 shares of common stock
as partial repayment of an advance.
On March 12, 1997, the Company issued 2,255,000 shares of common stock
for $705,000 pursuant to a private placement offering.
On March 26,1998, the Company issued 6,000,000 shares of common stock
for $900,000 pursuant to a private placement offering.
F-11
<PAGE>
VEGA-ATLANTIC CORPORATION
(An Exploration Stage Company)
Notes to the Financial Statements
March 31, 2000
NOTE 2: STOCKHOLDERS' EQUITY (continued)
In March 1998 the Company entered into an agreement to issue
15,000,000 restricted shares of common stock in exchange for the
rights to 173 unpatented lode-mining claims located in Camas County,
Idaho. The agreement was between Vega-Atlantic Corporation and Geneva
Resources, Inc. ("Geneva"). This agreement was subsequently rescinded
and a subsequent joint venture agreement between the same two parties
was signed March 28,1999 (Note 3). The second agreement required the
issuance of 500,000 common shares to Geneva.
In January of 1999, the Company settled a $5,841 accounts payable
balance with the issuance of 30,000 shares of common stock.
Pursuant to a private placement memorandum dated March 17, 1999, the
Company offered 3,000,000 shares of common stock at $.20 per share.
This offering was used for continued financing of the exploration,
development and expansion programs currently being conducted on the
Company's mining claims, for management consulting fees and to provide
working capital. As of March 31, 1999, the Company had received
payment for 1,500,000 shares of the offering. No further shares were
subscribed as part of the offering.
On March 18, 1999, the Company also entered into a Technology
Sub-License Agreement with Geneva and AuRIC Metallurgical
Laboratories, Inc. ("AuRIC") (Note 4). This agreement required the
issuance of 1,000,000 common shares to AuRIC and a $100,000
convertible note payable to Geneva. The shares were valued at the
trading value as of the date of issuance, or $140,000.
On March 28, 1999, the Company entered into a Joint Venture Agreement
with Geneva (Note 3). This agreement required the issuance of 500,000
common shares to Geneva. The shares were valued at the trading value
as of the date of issuance, or $75,000.
On March 1, 2000 the Company offered 5,000,000 shares of common stock
via a Reg. S offering. The Company is offering 5,000,000 restricted
common shares at $0.25 per share. The Company intends to raise
$1,250,000 from the offering. As of March 31, 2000, the Company has
received subscriptions for 560,000 shares of this issuance. The
Company received the $140,000 related to this subscription during May
of 2000.
F-12
<PAGE>
VEGA-ATLANTIC CORPORATION
(An Exploration Stage Company)
Notes to the Financial Statements
March 31, 2000
NOTE 2: STOCKHOLDERS' EQUITY (continued)
On March 29, 2000 the Company authorized the execution of agreements
for the settlement of advances and accrued interest payable through
the issuance of common stock. The Company settled advances and
associated accrued interest totaling $1,030,463 at $.50 per share,
which represents a 10% discount on the value of the common stock as of
March 29, 2000, for a total of 2,061,000 shares.
Dividends may be paid on outstanding shares as declared by the Board
of Directors. Each share of common stock is entitled to one vote.
NOTE 3: INVESTMENT IN PROFIT SHARING INTEREST
On March 28,1999, Geneva Resources, Inc. entered into a profit sharing
agreement with the Company. Under terms of the agreement, Geneva
received 500,000 restricted shares of common stock in the Company in
exchange for the sale of a future profit sharing interest. The Company
will be responsible to provide all funding and will be the operating
partner. The Company will initially retain 80% of the profits
resulting from the agreement. After the Company is repaid all of its
invested capital, the profit distribution will be 51% to the Company
and 49% to Geneva Resources, Inc. There are 213 unpatented lode-mining
claims that form the subject of this arrangement known as the Vega
Claims. As of March 31, 2000 there were no jointly controlled assets
pursuant to the agreement. The profit sharing interest was recorded as
a research and development expense for the year ended March 31, 1999.
As the lode mining claims are developed, the equity method of
accounting will be utilized to account for the joint venture agreement
with Geneva. The Company will have majority accounting control over
the development of the claims. As of March 31, 2000, no profit had
been generated by the development of the claims. During the fourth
quarter of the year ended March 31, 2000 the Company ceased
exploration of the lode-mining claims comprising the profit sharing
agreement (see Note 10).
NOTE 4: TECHNOLOGY SUBLICENSE AGREEMENT
In March of 1999, the Company entered into a definitive sub-license
agreement with Geneva Resources, Inc. ("Geneva"), to utilize assay and
metallurgical technology, know-how, and rights to technological
processes developed for the Blackhawk mineralization by AuRIC
Metallurgical Laboratories, Inc. ("AuRIC"). This sub-license is for
non-exclusive use in the Company's Vega Claim area in the State of
Idaho for a period not less than 40 years. Pursuant to this agreement,
the Company issued a $100,000 convertible promissory note to Geneva
Resources, Inc. and the Company also issued 1,000,000 restricted
common shares to AuRIC. The promissory note bears interest at 8% per
annum and is convertible into 500,000 common shares at the sole option
of the holder at any time after October 15, 1999. Pursuant to the same
agreement the Company also issued non-convertible promissory notes to
F-13
<PAGE>
VEGA-ATLANTIC CORPORATION
(An Exploration Stage Company)
Notes to the Financial Statements
March 31, 2000
NOTE 4: TECHNOLOGY SUBLICENSE AGREEMENT (continued)
both Geneva and AuRIC in the amount of $250,000 to each company. These
are 3% interest bearing notes and are payable upon the transfer of the
technology. As these notes bear interest below market value, the
Company has used an imputed interest rate of 10%. The imputed value of
these notes at issuance was $234,091 to each company.
As of March 31, 2000 the promissory notes and common stock have been
issued to the various parties, however, the related technology has not
been transferred. These promissory notes become due and payable upon
the transfer of the technology. Transfer of the technology was to
occur after completion of pilot scale testing. The technology was
scheduled for transfer during 1999. The Company has expensed the
amounts paid pursuant to the agreement as research and development
expense. Transfer of the technology or any settlement thereto will be
contingent on the outcome of the lawsuit described in Note 10.
NOTE 5: IMPAIRMENT LOSSES
During the period from January 1, 2000 to March 31, 2000 the Company
incurred due diligence expenses related to the proposed acquisitions
described in Note 11 and also advanced funds to the various parties.
These advances will be deducted from the total purchase price of the
joint venture interests should the Company proceed with the
acquisitions. These costs would normally be capitalized as an
investment in the joint venture interest, however, as any future cash
flows from the joint venture interests cannot be quantified, the
Company expensed costs totaling $193,416 as an impairment loss.
NOTE 6: ADVANCES AND NOTES PAYABLE
Advances and Notes Payable are comprised of the following:
Advances
--------
2000
----
Alexander Cox $114,602
Brent Pierce 11,000
--------
Total Advances $125,602
========
All advances are payable on demand and bear 10% simple interest. There
is $192 of accrued interest on the advances as of March 31, 2000.
F-14
<PAGE>
VEGA-ATLANTIC CORPORATION
(An Exploration Stage Company)
Notes to the Financial Statements
March 31, 2000
NOTE 6: ADVANCES AND NOTES PAYABLE (continued)
Notes Payable
-------------
To Geneva Resources, Inc. bearing interest at 8% per
annum. The note is convertible into 500,000 shares of
common stock at the sole option of the holder at any
time after October 15, 1999. The note is payable on
demand. $ 100,000
To AuRIC Metallurgical Laboratories, LLC, bearing
interest at 3% per annum, simple interest on the
average monthly balance outstanding. The note is
dated March 18, 1999 and has no stated maturity date. 250,000
To Geneva Resources, Inc., bearing interest at 3% per
annum, simple interest on the average monthly balance
outstanding. The note is dated March 18, 1999 and has
no stated maturity date. 250,000
---------
Total Notes Payable $ 600,000
=========
Accrued interest on the notes payable as of March 31, 2000 amounted to
$28,316.
NOTE 7: INCOME TAXES
The Company has incurred financial losses for each year since
inception. At December 31, 1998 and 1999, the Company's tax year end,
the Company had accumulated losses of $2,268,539 and $5,533,895,
respectively. As a result of these operating loss carry forwards, the
Company generated deferred tax assets of approximately $771,303 and
$1,881,524, respectively, which expire between the years 2003 and
2020. Deferred tax assets resulting from these carryforwards were as
follows:
12/31/98 12/31/99
-------- --------
Deferred tax assets $ 771,303 $ 1,881,524
Less: Valuation allowance (771,303) (1,881,524)
----------- -----------
$ -0- $ -0-
=========== ===========
NOTE 8: RELATED PARTY TRANSACTIONS
The Company has had various transactions with related parties, which
have been recorded in the financial statements. These transactions
have resulted primarily in notes or advances payable to the various
related parties.
F-15
<PAGE>
VEGA-ATLANTIC CORPORATION
(An Exploration Stage Company)
Notes to the Financial Statements
March 31, 2000
NOTE 9: MANAGEMENT SERVICES AGREEMENT
The Company has entered into a management services agreement with
Investor Communications International, Inc. ("Investor
Communications") to provide management of the day-to-day operations of
the Company. The management services agreement requires up to $75,000
per month for services rendered. This contract runs from April 1, 1999
through March 31, 2001.
The director and President of the Company is a part of the management
team provided by Investor Communications.
NOTE 10: CONTINGENCIES
On October 8, 2000, Intergold Corporation ("IGCO"), its wholly owned
subsidiary, International Gold Corporation ("IGC"), and Geneva
Resources, Inc. initiated a legal complaint against AuRIC
Metallurgical Laboratories, LLC ("AuRIC"), Dames & Moore, Ahmet
Altinay, General Manager of AuRIC, and Richard Daniele, Chief
Metallurgist for Dames & Moore. The damages sought by IGCO/IGC/Geneva
are to be determined in court. The damages incurred stem from reliance
on assays and representations made by AuRIC and upon actions and
engineering reports produced by Dames & Moore related to the Blackhawk
claims. IGCO/IGC/Geneva also alleges there were breaches of contract
by AuRIC and Dames and Moore, as well as other causes of action. This
legal proceeding affected the timing of technology to be transferred
from Geneva to the Company that was scheduled initially before the end
of 2000. There is a chance that the technology may never be
transferred. Subsequent to December 31, 1999, the Company ceased
exploration of the lode-mining claims comprising the profit sharing
agreement.
NOTE 11: POTENTIAL ACQUISITIONS
Golden Cycle de Panama, Inc. ("Golden Cycle"): On November 11, 1999,
the Company entered into a letter of intent with Golden Cycle
regarding acquisition of 100% of the issued and outstanding shares of
Golden Cycle (the "Letter of Intent"). Golden Cycle owns a gold
concession consisting of approximately 11.58 square miles in the
northern province of Veraguas, Conception River Area, in the Republic
of Panama. As of April 5, 2000, the Company does not consider Golden
Cycle a probable acquisition and has terminated discussions with
Golden Cycle regarding its acquisition based upon the results of the
Company's due diligence.
80% interest in Tun Resources Inc.: On January 12, 2000, the Company
entered into a letter of intent with Golden Thunder Resources Ltd.
("Golden Thunder") to purchase from Golden Thunder approximately
eighty percent (80%) of the issued and outstanding shares of common
stock of Tun Resources Inc., a Canadian corporation ("Tun Resources"),
with an option to purchase the remaining twenty percent (20%) of the
issued and outstanding shares of Tun Resources. Under the terms of the
proposed agreement, the Company would pay $1,180,000 and issue
F-16
<PAGE>
VEGA-ATLANTIC CORPORATION
(An Exploration Stage Company)
Notes to the Financial Statements
March 31, 2000
NOTE 11: POTENTIAL ACQUISITIONS (continued)
1,600,000 shares of its restricted common stock to Golden Thunder. Tun
Resources is the major stakeholder in two gold exploration and
development joint ventures in the Yunnan Province of China. Tun
Resources owns an approximate eighty-two percent (82%) joint venture
interest in the Yuntong Project, which consists of a gold concession
comprising approximately 30 square kilometers. Tun Resources also owns
an approximate eighty percent (80%) joint venture interest in the
Lutong Project, which consists of a gold exploration concession
comprising approximately 100 square kilometers in the same province.
On May 2, 2000, the Company executed a definitive closing agreement to
purchase the 80% interest in issued and outstanding shares of Tun
Resources Inc. The Company has completed its due diligence efforts and
is proceeding with funding initiatives pursuant to Tun Resources' two
majority owned gold exploration and development joint ventures in the
Yunnan Province of China. The 80% interest in Tun Resources is
purchased in exchange for the funding commitment of $1,180,000 by
August 15, 2000 and the 1,600,000 restricted shares in the capital of
the Company. Vega-Atlantic Corporation also received the option to
purchase the remaining 20% of Tun Resources at fair market value.
Lemachang Silver Mine Joint Venture: On March 27, 2000, the Company
entered into an agreement with the No. 1 Geological Brigade of Yunnan
Bureau of Geology and Mineral Resources of Qujing City, Yunnan
Province, Peoples Republic of China ("PRC") to acquire via joint
venture, majority control in the producing Lemachang silver mine,
located in the Ludian County Seat, Yunnan Province of the PRC.
The Lemachang silver mine is only three years old, has processing
capacity of 300 tonnes of ore per day to produce approximately 600,000
ounces per year of silver, and includes a drill proven resource of 13
million ounces, with an additional 27 million ounce inferred resource.
Other areas drilled support a further approximate 23 million ounce
inferred resource over a 4.6 km section. The exploration area's
mineralization potential has not been fully ascertained, and the
Company plans to conduct drilling, and test work to verify these
resources.
Under terms of the agreement, the Company will invest up to US $4
million (subject to appraisal and due diligence) to increase
production, expand reserves, and improve overall silver recovery. The
joint venture plans to accelerate drilling to expand the existing
reserve and undertake production engineering feasibility studies to
increase production and output to a target of 1,000,000 oz of metallic
silver per year. Until the completion of all due diligence, the
Company will not consider the acquisition probable.
F-17
<PAGE>
VEGA-ATLANTIC CORPORATION
(An Exploration Stage Company)
Notes to the Financial Statements
March 31, 2000
NOTE 12: SUBSEQUENT EVENTS
Employee Stock Option Plan: On May 1, 2000, the shareholders of the
Company as represented by 51% of the issued and outstanding common
shares of the Corporation voted to approve the creation of an employee
stock option plan. The plan extends for a 10-year term and consists of
2,000,000 share options at $0.25 per share.
Ailaoshang Joint Venture Proposal: On May 4, the Company entered into
an agreement with the No. 1 Geological Brigade of the Yunnan Bureau of
Geology and Mineral Resources of Qujing City, Yunnan Province, Peoples
Republic of China ("No. 1 Geological Brigade") whereby the Company has
the right to acquire via joint venture a 70% interest in the
Ailaoshang gold concession and prospect with claims that include the
"Xiaoshuijing" 350,000 ounce gold resource located in the Chuxion
Prefecture, Yunnan Province, PRC.
The Company will conduct due diligence on the property by confirmation
and test drilling, and expect geological reports to provide the basis
for negotiation of final terms of a definitive Sino-Foreign
Cooperative joint venture agreement. Upon confirmations of further due
diligence, the Company will invest up to US $2.5 million to expand the
reserves and increase mine production. The No. 1 Geological Brigade
will contribute the Ailaoshang property, exploration and mining
rights, permits, land use rights, and other work to date completed on
the Ailaoshang property. Until the completion of all due diligence,
the Company will not consider the acquisition probable.
The Xiaoshuijing property is located approximately 150 km northwest of
the Company's Tun Resources Inc.'s Yuntong JV 100,000 ounce gold
property. The 45 km highway from Chuxiong City via Xineun Town
provides access to the Xiaoshuijing area. The geological resource is
located in mid-high mountainous area approximately 1,500 to 2,000 m in
elevation. Work conducted recently by the No. 1 Geological Brigade
indicates peripheral gold occurrences located could increase future
gold resources. Mining operations are limited at present as further
heap leach mine testing is in process. Current mining activities
operate during the dry season from approximately October to May each
year. The Xiaoshuijing property has been mined on a small scale since
1993.
Assignment Agreement: On May 8, 2000, the Company executed an
assignment agreement that transferred and conveyed the potential
claims and causes of action that the Company may have in connection
with the Sub-license Agreement with Geneva Resources, Inc. (Notes 4,
6, and 10). If amounts are recovered by the lawsuit initiated by
International Gold Corporation and Geneva Resources, Inc., the Company
will receive the equivalent pro rata share of the potential settlement
in relation to all other claims and causes of action for which any
damages of settlement amounts are recovered. The Company has made this
assignment to Geneva Resources, Inc.
F-18
<PAGE>
VEGA-ATLANTIC CORPORATION
(An Exploration Stage Company)
Notes to the Financial Statements
March 31, 2000
NOTE 12: SUBSEQUENT EVENTS (continued)
Frankfurt Exchange Listing: On May 26, 2000, the Company announced
that its securities are now available through the Frankfurt Stock
Exchange ("FWB") in Germany. The Company's trading symbol on the
Frankfurt exchange is "VGA".
Shares issued for Debt: On May 29, 2000, the Company issued 200,000
shares for outstanding debt of the Corporation in the amount of
$15,000.
F-19
<PAGE>
VEGA-ATLANTIC CORPORATION
(An Exploration Stage Company)
UNAUDITED CONDENSED
PROFORMA FINANCIAL STATEMENTS
TABLE OF CONTENTS
-----------------
Page
----
Unaudited Condensed Proforma Balance Sheet - March 31, 2000 F-21
Unaudited Condensed Proforma Statements of Operations:
For the Year Ended March 31, 2000 F-22
For the Year Ended March 31, 1999 F-23
Schedule of Assumptions and Explanatory Notes F-24 - F-26
F-20
<PAGE>
<TABLE>
<CAPTION>
VEGA ATLANTIC CORPORATION
(An Exploration Stage Company)
UNAUDITED PROFORMA CONDENSED BALANCE SHEETS
March 31, 2000
Vega Tun Consolidated
Atlantic Resources Proforma Balance
Corporation Inc. Adjustments Sheet
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Assets
Current Assets
Cash and Cash Equivalents $ 100,328 $ 4,675 $ -- $ 105,003
Other Assets
Advances Receivable -- -- -- --
Other Assets -- 1 -- 1
Goodwill -- -- 908,259 908,259
Impairment Loss on Goodwill -- -- (908,259) (908,259)
----------- ----------- ----------- -----------
Total Assets $ 100,328 $ 4,676 $ -- $ 105,004
=========== =========== =========== ===========
Liabilities and Stockholders' Equity
Liabilities
Current Liabilities $ 1,018,624 $ 140,000 $ (140,000) $ 1,018,624
Minority Interest (208,717) (208,717)
Stockholders' Equity
Common Stock 196 1 15 212
Paid in Capital 5,024,259 4,428,861 (3,628,877) 5,824,243
Accumulated Deficit through
Exploration Stage (5,942,751) (4,564,186) 3,977,579 (6,529,358)
----------- ----------- ----------- -----------
Total Liabilities and Stockholders' Equity $ 100,328 $ 4,676 $ -- $ 105,004
=========== =========== =========== ===========
See Schedule of Assumptions and Explanatory Notes.
F-21
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VEGA ATLANTIC CORPORATION
(An Exploration Stage Company)
UNAUDITED PROFORMA CONDENSED STATEMENTS OF OPERATIONS
For the Year Ended March 31, 2000
Vega Tun Consolidated
Atlantic Resources Proforma Operating
Corporation Inc. Adjustments Statement
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Operating Expenses $ (968,968) $ (203,325) $ (231,999) $ (1,404,292)
------------ ------------ ------------ ------------
Operating Loss (968,968) (203,325) (231,999) (1,404,292)
Other Expenses
Interest Expense (122,743) -- -- (122,743)
------------ ------------ ------------ ------------
Net Loss $ (1,091,711) $ (203,325) $ (231,999) $ (1,527,035)
============ ============ ============ ============
Distribution of Net Loss:
To Controlling Interest $ (1,091,711) $ (162,660) $ (185,599) $ (1,439,970)
To Minority Interest -- (40,665) (46,400) (87,065)
------------ ------------ ------------ ------------
Net Loss $ (1,091,711) $ (203,325) $ (231,999) $ (1,527,035)
============ ============ ============ ============
Earnings (Loss) Per Share - Basic $ (0.062) $ (101,663) $ (0.075)
============ ============ ============
Weighted Average Number of
Common Shares Outstanding 17,596,262 2 1,599,998 19,196,262
============ ============ ============ ============
See Schedule of Assumptions and Explanatory Notes.
F-22
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VEGA ATLANTIC CORPORATION
(An Exploration Stage Company)
UNAUDITED PROFORMA CONDENSED STATEMENT OF OPERATIONS
For the Year Ended March 31, 1999
Vega Tun Consolidated
Atlantic Resources Proforma Operating
Corporation Inc. Adjustments Statement
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Operating Expenses $ (1,180,597) $ (82,000) $ (3,339,088) $ (4,601,685)
------------ ------------ ------------ ------------
Operating Loss (1,180,597) (82,000) (3,339,088) (4,601,685)
Other Expenses
Interest Expense (33,104) -- -- (33,104)
------------ ------------ ------------ ------------
Net Loss $ (1,213,701) $ (82,000) $ (3,339,088) $ (4,634,789)
============ ============ ============ ============
Distribution of Net Loss:
To Controlling Interest $ (1,213,701) $ (65,600) $ (2,671,270) $ (3,950,571)
To Minority Interest -- (16,400) (667,818) (684,218)
------------ ------------ ------------ ------------
Net Loss $ (1,213,701) $ (82,000) $ (3,339,088) $ (4,634,789)
============ ============ ============ ============
Earnings (Loss) Per Share - Basic $ (0.083) $ (82,000) $ (0.244)
============ ============ ============
Weighted Average Number of
Common Shares Outstanding 14,600,890 1 1,599,999 16,200,890
============ ============ ============ ============
See Schedule of Assumptions and Explanatory Notes.
F-23
</TABLE>
<PAGE>
VEGA ATLANTIC CORPORATION
(An Exploration Stage Company)
UNAUDITED PROFORMA FINANCIAL STATEMENTS
SCHEDULE OF ASSUMPTIONS AND EXPLANTORY NOTES
NOTE 1: PROPOSED ACQUISITION
Pursuant to a letter of intent dated January 10, 2000, Vega Atlantic
Corporation ("the Company") has agreed to a proposed acquisition from
Golden Thunder Resources, Ltd. ("Golden Thunder") of an 80% interest
in Tun Resources, Inc. ("Tun Resources"). The Company will also
receive a two-year option to purchase the remaining 20% of Tun
Resources at fair market value. In exchange for the acquisition, the
Company is required to issue to Golden Thunder 1,600,000 Rule 144
common shares of the Company as of the closing date of the
acquisition. The Company is required to make a total of $1,180,000 in
capital contributions to Tun Resources by August 15, 2000. The
proposed acquisition, which was consummated May 1, 2000, will be shown
using the purchase method.
NOTE 2: SIGNIFICANT ASSUMPTIONS
The March 31, 2000 balance sheets and Company's Statements of
Operations for the years ended March 31, 2000 and 1999 have been
audited. The Statement of Operations presented for Tun Resources for
the year ended March 31, 1999 is management prepared. All management
prepared financial statements contain all normal and recurring
adjustments required to present the financial information on a basis
consistent with the presentation of the Company's annual audited
financial statements.
Proforma Balance Sheets
-----------------------
The proforma balance sheets reflect the balance sheets of the Company
and Tun Resources, Inc. as of March 31, 2000. The consolidated balance
sheet is presented as if the acquisition had occurred on March 31,
2000.
Proforma Statements of Operations
---------------------------------
The proforma statements of operations for the years ended March 31,
2000 and 1999 reflect the statements of operations of the Company and
of Tun Resources, Inc. Proforma adjustments have been made to give
effect to these transactions as if they had occurred as of April 1,
1999 and April 1, 1998, respectively.
F-24
<PAGE>
VEGA ATLANTIC CORPORATION
(An Exploration Stage Company)
UNAUDITED PROFORMA FINANCIAL STATEMENTS
SCHEDULE OF ASSUMPTIONS AND EXPLANTORY NOTES
NOTE 3: PROFORMA ADJUSTMENTS
Proforma Balance Sheets
-----------------------
The Company has adjusted the balance sheet for the issuance of
1,600,000 common shares to Golden Thunder for the acquisition of the
80% interest in Tun Resources. The proforma balance sheet assumes the
closing occurred effective March 31, 2000. The Company's $.00001 par
common stock was valued at $60,000 based on the market price of $.50
per share on March 31, 2000.
At March 31, 2000, Tun Resources had assets of $4,676, current
liabilities of $140,000 and a stockholders' deficit of $135,324.
Twenty percent of the stockholders' deficit ($27,065) is attributable
to the minority interest. The Company has recorded a joint venture
investment of $908,259. As any future profits related to Tun
Resources's joint venture interests cannot be estimated until
additional exploration is performed, the Company has fully impaired
the value of its joint venture investment.
The $908,259 impairment loss has been allocated $181,652 to the
minority interest and $726,607 to "Deficit Accumulated During the
Exploration Stage".
The $140,000 current liability is an intercompany loan. As future
profits from the joint venture interests cannot be estimated until
additional exploration is performed, the Company had impaired the
value of the intercompany receivable. The $140,000 has been eliminated
through the reduction of the intercompany payable and the recognition
of $140,000 of income to offset the original impairment loss taken by
the Company.
Proforma Statement of Operations
--------------------------------
The Company has adjusted the March 31, 2000 statement of operations
for the impairment of its joint venture interests. The Company
initially recorded its joint venture interests at $231,999 on the
acquisition of Tun Resources, Inc. As any future profits related to
Tun Resource's joint venture interests cannot be estimated until
additional exploration is performed, the value of the joint venture
interests has been impaired. An adjustment for the $231,999 impairment
loss has been recorded as an operating expense.
Assuming the acquisition took place April 1, 1999 for the March 31,
2000 statement of operations, the Company would have an additional
1,600,000 shares outstanding for the entire period. The two Tun
Resources shares outstanding would be eliminated due to the
consolidation. The earnings per share of the consolidated company
reflect only the net losses applicable to the controlling interest.
F-25
<PAGE>
VEGA ATLANTIC CORPORATION
(An Exploration Stage Company)
UNAUDITED PROFORMA FINANCIAL STATEMENTS
SCHEDULE OF ASSUMPTIONS AND EXPLANTORY NOTES
NOTE 3: PROFORMA ADJUSTMENTS (continued)
The Company has adjusted the March 31, 1999 statement of operations
for the impairment of its joint venture interests. The Company
initially recorded its joint venture interests at $3,339,088 on the
acquisition of Tun Resources, Inc. As any future profits related to
Tun Resource's joint venture interests cannot be estimated until
additional exploration is performed, the value of the joint venture
interests has been impaired. An adjustment for the $3,339,099
impairment loss has been recorded as an operating expense.
Assuming the acquisition took place April 1, 1998 for the March 31,
1999 statement of operations, the Company would have an additional
1,600,000 shares outstanding for the entire period. The only Tun
Resources share outstanding would be eliminated due to the
consolidation. The earnings per share of the consolidated company
reflect only the net losses applicable to the controlling interest.
F-26
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
Identification of Directors and Executive Officers
The directors and executive officers of VGAA are as follows:
Name Age Position with VGAA
---- --- ------------------
Grant Atkins 40 Director and President
John Frederick 58 Director
William Bowles
Herb Ackerman 69 Secretary/Treasurer
GRANT ATKINS has been a Director and the President of VGAA since October
15, 1998. Mr. Atkins has also been a director and the secretary/treasurer of
IGCO since September of 1998. For the past five years, Mr. Atkins has been
self-employed and has acted as a financial and project coordination consultant
to clients in government and private industry. He has extensive multi-industry
experience in the fields of finance, administration and business development.
Industry experience includes a one-year role in 1998-99 as interim Chief
Financial Officer of Emergency Communications for Southwest British Columbia
("E-Comm"). E-Comm is a $150 to $200 million (Canadian Dollar) radio and
tri-service dispatch initiative and deployment for police, fire and ambulance
for Southwest British Columbia, which has federal, provincial and municipal
shareholders. During his tenure at E-Comm during its start-up phase, E-Comm
raised in excess of $146,000,000 (Canadian Dollar) through debt financing from
the Municipal Finance Authority in British Columbia. During 1998 and 1999, Mr.
Atkins was a consultant through the private management consulting companies of
Tristar Financial Services, Inc. and Investor Communications International, Inc.
Mr. Atkins was retained to conduct financial consulting and project coordination
services for the British Columbia Ambulance Service on a part-time basis through
1999. Mr. Atkins has provided organization and controller duties to VGAA since
October of 1998.
JOHN FREDERICK WILLIAM BOWLES, BSc., Ph.D, FGS, FIMM, CEng., CGeol.,
EurGeol. Dr. Bowles has been a director of VGAA since November 23, 1999, and is
a Mineralogist and Economic Geologist. Mr. Bowles graduated from the University
of London with honors and earned both Bachelor and Doctorate degrees. In
<PAGE>
addition, Mr. Bowles has Chartered Engineer, Chartered Geologist, and European
Geologist designations and has memberships and active association with the
Mineralogical Society, the Mineralogical Society of America, and the Irish
Association for Economic Geology. Mr. Bowles is a Fellow of the Mineralogical
Society, the Geological Society, and the Institution of Mining and Metallurgy.
Mr. Bowles retains honorary senior research fellowships with the Geology
Department of Manchester University and the Department of Earth Sciences of
Kingston University, both located in the United Kingdom. Mr. Bowles has authored
over fifty scientific research papers during the past 25 years for numerous
trade and industry publications worldwide. For the past 14 years, Mr. Bowles has
acted as the managing director of Mineral Science Ltd. of Chesham, UK. Mineral
Science Ltd. is an international geological and mineralogical consultancy
specializing in the assessment of metalliferous minerals in relation to
commercial mining operations.
HERB ACKERMAN has been the secretary-treasurer of VGAA since February 10,
2000. Mr. Ackerman has considerable minerals exploration experience. From April
1995 to September 1997, Mr. Ackerman was a self-employed businessman who
consulted with various enterprises primarily in the mineral resources
exploration fields on fundraising. From September 1997 to the present, Mr.
Ackerman acts as the President of Montoro Resources Inc. listed on the Canadian
Venture Exchange (CDNX), a company involved in exploration of gold, zinc and
copper. In his capacity as President of Montoro Resources Inc., Mr. Ackerman
administers the day-to-day operations, provides investor relations duties,
arranges various financings, and seeks and evaluates general business prospects
of interest.
Section 16(a) of the Exchange Act requires VGAA's directors and officers,
and the persons who beneficially own more than ten percent of the common stock
of VGAA, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Copies of all filed reports are required to
be furnished to VGAA pursuant to Rule 16a-3 promulgated under the Exchange Act.
Based solely on the reports received by VGAA and on the representations of the
reporting persons, VGAA believes that these persons have complied with all
applicable filing requirements during the fiscal year ended March 31, 2000.
ITEM 10. EXECUTIVE COMPENSATION
Compensation of Officers and Directors
As of the date of this Annual Report, directors of VGAA accrue $500 per
month in directors' fees for their roles as directors. Mr. Atkins and Dr. Bowles
accrued $6,000 and $1,500, respectively, during fiscal year ended March 31, 2000
as compensation for their roles as directors of VGAA. Officers and directors of
VGAA are reimbursed for any out-of-pocket expenses incurred by them on behalf of
VGAA.
As of fiscal year ended March 31, 2000, VGAA has accrued since inception
approximately $47,767 in directors' fees and paid none of these fees to its
directors as executive compensation. During fiscal year ended March 31, 2000,
VGAA accrued approximately $679,500 to ICI pursuant to a consulting services and
management agreement with ICI dated April 1, 1999 for services rendered or to be
rendered pursuant to the terms and provisions of the agreement.
<PAGE>
Directors and officers of VGAA are reimbursed for any out-of-pocket
expenses incurred by them on behalf of VGAA. Executive compensation is subject
to change concurrent with VGAA requirements. Neither Mr. Atkins nor Dr. Bowles
is a director or officer of ICI, nor does VGAA own of record capital stock of
ICI. Of the amounts paid to ICI, Dr. Bowles did not receive any compensation
directly or indirectly from ICI. During the fiscal year ended March 31, 2000,
Mr. Atkins received approximately $60,000 from ICI for work conducted relating
to the management and administration of VGAA. As of March 29, 2000, VGAA issued
1,500,800 shares of restricted Common Stock to ICI for settlement of debt in the
aggregate amount of $750,389.38.
Summary Compensation Table
(1)
Annual Compensation Awards Payouts
--------------------- ---------- -------
$ $ $ $ # $ $
Name and Position Salary Bonus Other RSA Options LTIP Other
----------------- ------ ----- ----- --- ------- ---- -----
Grant Atkins 1999 0 0 $3,000 0 0 0 0
Pres./Director 2000 0 0 $6,000 0 0 0 0
John Bowles 2000 0 0 $1,500 0 0 0 0
Director
Herb Ackerman 2000 0 0 0 0 0 0 0
(1) Annual compensation based on fiscal year of April 1st to March 31st and
paid according to individual contractual arrangements.
Non-Qualified Stock Option Plan
On May 1, 2000, the board of directors of VGAA adopted the Non-Qualified
Stock Option Plan (the "SOP"), which initially provides for the grant of options
to purchase an aggregate of 2,000,000 shares of Common Stock at $0.25 per share.
The purpose of the SOP is to make options available to directors, management and
significant contractors of VGAA in order to encourage them to secure an interest
or an increase on reasonable terms of stock ownership in VGAA and to remain in
the employ of VGAA, and to provide them compensation for past services rendered.
<PAGE>
The SOP is administered by the board of directors which determines the
persons to be granted options under the SOP, the number of shares subject to
such options, the exercise price of such option and the option period, and the
expiration date, if any, of such options. The exercise of an option may be less
than fair market value of the underlying shares of Common Stock. No options
granted under the SOP will be transferable by the optionee other than by that
provided by the Option Grant Agreement or will or the laws of descent and
distribution, and each option will be exercisable during the lifetime of the
optionee, only by such optionee.
The exercise price of an option granted pursuant to the SOP may be paid in
cash, by the surrender of options, in Common Stock, in other property, including
the optionee's promissory note, or by a combination of the above.
As of the date of this Annual Report, options have been granted in the
aggregate of 1,950,000 shares to the individuals reflected in the table below.
All options granted are exercisable by the respective individual from the date
of grant through the date of expiration. No share options have been exercised as
of the date of this Annual Report.
Aggregated Options/SAR Exercises and Fiscal Year End Options/SAR Value Table
--------------------------------------------------------------------------------
Name Number of Date of Grant Exercise Date Date of
Shares Granted Expiration
--------------------------------------------------------------------------------
Grant Atkins 100,000 05/01/00 05/01/00 04/30/10
Herb Ackerman 100,000 05/01/00 05/01/00 04/30/10
John Bowles 100,000 05/01/00 05/01/00 04/30/10
Brent Pierce 500,000 05/01/00 05/01/00 04/30/10
Gary 100,000 05/01/00 05/01/00 04/30/10
Marcus Johnson 100,000 05/01/00 05/01/00 04/30/10
Gino Cicci 100,000 05/01/00 05/01/00 04/30/10
Harold Gooding 100,000 05/01/00 05/01/00 04/30/10
Tun Resources Ltd. 500,000 05/01/00 05/01/00 04/30/10
Rudolf Heinz 250,000 06/21/00 06/21/00 04/30/10
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the name and address, as of the date of this
Annual Report, and the approximate number of shares of Common Stock of VGAA
owned of record or beneficially by each person who owned of record, or was known
by VGAA to own beneficially, more than five percent (5%) of VGAA's Common Stock,
and the name and shareholdings of each officer and director, and all officers
and directors as a group.
<PAGE>
--------------------------------------------------------------------------------
Title of Class Name and Address Amount and Nature Percent
of Beneficial Owner of Class of Class
--------------------------------------------------------------------------------
(1) (2)
Common Stock AuRIC Metallurgical 1,500,000 7.0%
Laboratories, LLC
3260 West Directors Row
Salt Lake City, Utah 84104
(1)
Common Stock Golden Thunder Resources Ltd. 1,800,000 8.4%
938 Howe Street, Suite 402
Vancouver, British Columbia
V6Z 1N9 Canada
(1)
Common Stock Investor Communications 1,500,800 7.0%
International, Inc.
435 Martin Street, Suite 2000
Blain, Washington 98320
(1) (3)
Common Stock All officers and directors 300,000 1.4%
as a group (3 persons)
----------------
(1) These are restricted shares of Common Stock.
(2) The beneficial owners of AuRIC Metallurgical Laboratories LLC are (i) Ahmet
Altinay 56%; (ii) David Lamberson 20%; (iii) John Merrinton 12%; and Noble
Larson 12%.
(3) Includes the assumption of the exercise of options by each option holder
pursuant to the terms of the Non-Qualified Stock Option Plan to purchase an
aggregate of 300,000 shares of restricted Common Stock at $0.25 per share.
See "Item 10. Executive Compensation - Non-Qualified Stock Option Plan".
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of the date of this Annual Report, VGAA has not entered into any
contractual arrangements with related parties other than those transactions
relating to the contractual arrangements with ICI and those resulting primarily
from advances made by related parties to VGAA and subsequent issuance of notes.
Mr. Atkins is a director and the president of VGAA, and is a member of the
management team provided by ICI. The board of directors of VGAA has not adopted
or approved any policy regarding possible future transactions with related third
parties.
Messrs. Atkins, Bowles and Ackerman are engaged in other businesses, either
individually or through partnerships and corporations in which they may have an
interest, hold an office or serve on the boards of directors. The directors of
VGAA, Messrs. Atkins and Bowles, have other business interests to which they may
devote a major or significant portion of their time. Certain conflicts of
interest, therefore, may arise between VGAA and its directors. Such conflicts
can be resolved through the exercise by Messrs. Atkins and Bowles of judgment
consistent with their fiduciary duties to VGAA. Messrs. Atkins and Bowles intend
to resolve such conflicts in the best interests of VGAA. Moreover, Messrs.
Atkins and Bowles will devote their time to the affairs of VGAA as they deem
necessary.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
The following Exhibits are filed as part of this Annual Report.
--------------------------------------------------------------------------------
Exhibit No. Description
--------------------------------------------------------------------------------
10.5 Share Purchase and Sale Agreement between VGAA and Golden Thunder
Resources Ltd. and Tun Resources Ltd. dated March 31, 2000.
10.6 Non-Qualified Stock Option Plan dated May 1, 2000.
The following Reports on Form 8-K were filed during the last quarter of the
period and to date of this Annual Report.
Item Date
8-K February 14, 2000
8-K February 17, 2000
8-K April 6, 2000
8-K May 22, 2000
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
VEGA-ATLANTIC CORPORATION
Dated: June 29, 2000 By: /s/ Grant Atkins
--------------------
Grant Atkins, President
